 |
|
  |
 |
|
|
|
|
|||
|
Indicators> Economic Indicators> Quarterly Bulletin Third Quarter 1997 |
|||
|
Quarterly Bulletin Third Quarter 1997
Volume (3) No. (3) September, 1997 Main Economic Indicators 1. Inflation Third Quarter, 1997 The Consumer Price Index for the third quarter of 1997, (September) stood at 163.4, whereas the previous month (August) stood at 163.8. In June, a quarter earlier, the index stood at 162.8, while one year earlier the index stood at a 156.3. On a quarterly comparison two of the subgroups remained unchanged, namely Housing and Transportation, while the subgroups Food, Beverage and Tobacco and Miscellaneous increased by 1.20 and 2.48 percent respectively. At the same time the subgroups Furniture and Household Supplies, Clothing and Footwear and Services declined by 0.14, 0.56 and 0.59 percent, respectively. The point-to-point monthly, quarterly, and annual rates of inflation stood at -0.24, 0.37 and 4.54 percent, respectively.
Inflation Rates
Annual Inflation Rates
The relative strength of the US dollar against the Japanese Yen during the third quarter had a noticeable effect on the import prices of consumer durables, automobiles, auto spare parts and electronic goods. This weakening of the US dollar against the Yen was likely responsible for some of the consumer price inflation seen during the past two quarters. On the other hand, the strengthening of the dollar against the British Sterling will have impacted import price inflation positively, but on a smaller scale due to the lower volume of British imports. A key foreign currency, the European Currency Unit (ECU), in terms of loans to the official sector, remained unchanged for most of the past three (3) quarters. The Canadian dollar remained unchanged.
Foreign Exchange Rates
Currencies vs United States Dollar
3. Transactions with the Rest of the World The combined impact of seasonality and better than expected summer season led by the absence of hurricanes, resulted in a drop of 14.3 percent in the overall balance of the major components of the external account compared to the second quarter. A 16.4 percent decline in import payments together with a 15.9 percent reduction in export earnings led to the fall of the external account balance. Compared to the third quarter 1996, the overall balance expanded 62.5 percent as a result of a 1.1 rise in imports and 11.6% jump in export earnings due to a good tourist season. Tourist and financial service export earnings rose 11.3 percent to $59.5mn while imports settled at $44.3mn; with goods amounting to 78.1 percent of all imports. Imports of goods grew by only 0.8 percent over the third quarter 1996.
Transactions with the Rest of the World
Current Account: Major Components ($'000)
Compared with the previous quarter, total deposits and loans outstanding grew by 2.3% and 4.7% as the indices of total deposits and loans outstanding rose to 226 and 262 from 221 and 250, respectively in the second quarter. The steady prime interest rate of 8.5% no doubt contributed to the faster rate of expansion in loans outstanding. In terms of total deposits, demand and savings deposits amounted to 44% of total deposits while certificate of deposits, showing only a 1.3% growth over the previous quarter, amounted to the remaining 54.0% of total deposits. As has been the case in the last 6 quarters, loans outstanding continue to grow at a pace faster than total deposits.
Money Indicators
Indices of Deposits and Loans
The index of business licences operating since 1990 reached 154 compared to the 152 recorded at the end of the second quarter of 1997. This meant that the number of trade licences in operation jumped 3.5 percent above 1996 levels although the number of new licences approved amounted to only 52.8 percent of the number approved during 1996. On the other hand, the number of licences renewed amounted to 253 or 89.1 percent of the 384 approved during the second quarter 1997. These indicators suggest a steadily growing business sector in terms of the number of licences issued, renewed and operating in the territory. However, these indicators are not the ultimate ones for determining the health of the business sector. General Business Indicators: Trade Licenses Paid
Quarterly Issue of Trade Licenses
Over the past four quarters the number of local companies registered on a quarterly basis has been more or less steady reflecting the performance of overall economic activity in the country. The 42 companies registered during the review quarter is just below the 48 companies registered during the third quarter 1995. The index of 103 suggests that local company formation is back to 1993 levels, the base year of the index.
General Business Indicators:
Company Registration
Current revenue of $32.0mn, during the quarter, represented a growth rate of 37.3 percent over the same period 1996, and amounted to 71.0 percent of the $45.1 mn seen during the second quarter. On the other hand, total expenditure, a key indicator of Central Government spending, grew 1.8 percent compared with the third quarter 1996 figures, and rose 53.2 percent above the $23.1mn during the second quarter. Current expenditure, a more accurate barometer of control of expenditure, amounted to 93.0 percent of third quarter 1996 levels of $32.4mn, and represented a 45.3 percent growth over the second quarter expenditure. Capital expenditure of $5.2 mn represented growth rates of approximately 123.0 percent over the third quarter 1996 and the second quarter 1997.
Central Government
Central Government Spending
Reflecting the better than expected performance in the third quarter economic activity, the level of electricity generation and consumption expanded 2.4% and 2.1%, compared to the previous quarter. The absence of hurricane damage to interrupt economic activity contributed to the increases seen in electrical power production and consumption. Likewise, water production and consumption increased by 2.3% and 3.9%, respectively. The expansion in water related demand was connected with the reduction of unaccounted for water, general increases in consumption and growth in the distribution system.
Energy: Electricity and Water
Electricty and Water Activity
The number of licensed vehicles during the third quarter amounted to only 1.6 percent more than the amount seen at the end of the second quarter as a result of a 2.2%, 1.0% and 3.3% increase in the number of transport, private cars and other vehicles, respectively. Similarly to the previous quarter, private cars dominated the fleet amounting to 1,501 or a 74.0% share suggesting that private cars have been the fastest growing vehicle type in the British Virgin Islands. Reduction in the number of unlicensed vehicles continues to account, in part, for the higher number of vehicles licensed in the past three quarters.
Land Transport
Source: Licencing Department
Motor Vehicles by Type
Total calls and total call minutes indices rising only slightly to 173 and 164, respectively confirmed the expected slower growth in telecommunications during the off peak economic activity period. The indices reveal that both domestic and overseas activities were slower than in the previous quarter with total calls indices of 138 and 160. As well indices of call minutes grew to 150 and 175 for international and local activities, respectively. The drop off in growth is seasonal and is reflective of the fall in overnight visitors to the British Virgin Islands during the third quarter.
Communications
Index of Telephone Calls
Reflecting a continuation of the trend started a few quarters ago, the import of basic construction materials (cement and steel) expanded 20.8 percent when compared to the second quarter. Unlike the previous quarter, when it amounted to 41.6 percent, cement imports amounted to 48.2 percent of total imports of the basic materials. During the third quarter, imports of cement rose 40.0 percent compared with a 7.1 percent growth in steel imports. This rise in imports is in line with the expansion of credit for the construction of homes, office accommodation and other commercial buildings.
Construction
Imports of Cement and Steel Bars
Apart from not having no cruiseship arrivals in the third quarter, tourism performance turned out better than expected with overnight arrivals, tourist nights and tourism receipts amounting to 77.5, 88.4 and 76.2 percent of the figures seen during the second quarter. Compared with the third quarter 1996, for the purposes of factoring out seasonality, overnight arrivals, number of tourists nights and tourism receipts grew 34.1, 16.0 and 34.6 percent. Of course there were no cruiseship figures for comparison.
Tourism
Tourist Visitors
13. International Business Companies The number of IBC’s registered during the third quarter amounted to 93.5 percent of those registered during the first quarter 1997, but represented only a 3.9 percent growth over figures seen during the second quarter of 1997. Overall, registration figures for the first three quarters represent an 8.75 percent over companies register during the same period in 1996. This positive performance in the growing number of IBC’s registered brought the index of registered companies and companies incorporated to 307 and 587, respectively.
International Financial Sector
IBC's Registration
14. Economic Performance Summary Review A good combination of domestic activities and better than expected output from international trade in tourism provided for a surprisingly good third quarter. Domestic economic activities benefited from a boost in public sector investment outlays on construction, expanded commercial credit to construction, a slight fall in the annual Consumer Price Index and a mixed performance in the pool of key foreign currencies. The external sector was highlighted by a moderate increase in tourist inflows and expected steady inflows from international financial services. International trade, mainly in tourist and financial services, recorded a drop of 14.3% in the overall balance due mainly to seasonality of tourism, compared to the second quarter 1997. However, compared to the second quarter 1996, the overall balance expanded 62.5% as a result of 1.1% rise in imports and an 11.6% jump in export earnings ( over the second quarter 1997) from a moderately good off-season. Tourist and financial services export earnings rose 11.3% to $59.5mn while imports settled at $44.3mn. The external sector was further boosted by a slight fall in the strength of the US dollars against the ECU. However, the weakening of the US dollar against the Japanese Yen did not help in stemming the rising prices of imported durables, automobiles and electronic goods. Domestic economic activities were highlighted by a 4.7% expansion in bank credit mainly for private home construction, commercial transactions and personal purposes. Construction activities were further expanded by a $5.2mn level of public investment compared with the $2.4mn level seen during the second quarter. Adding to admirable private sector investment push was the good performance of the current account of the Central Government. Current revenue of $32.0mn represented a growth rate 37.3% over 1996 figures while current expenditure grew by 1.8% to $23.1mn. Economic activities on the domestic scene were further supported by a fall in the CPI annual rate to under 6.0% reversing the earlier trend which peaked at 8.2% in the second quarter (April 1997). The strength of the domestic sector was further underlined by moderate positive movement in indicators of land transport, business activities, corporate formation, utilities consumption and telecommunications services. Despite being an off peak economic period, comparable indicators for the similar period one year earlier suggest that the economy of the British Virgin Islands did moderately better than expected. 15. ECONOMIC OUTLOOK FOR THE FOURTH QUARTER, 1997 The fourth quarter will see a continued demonstration of the strength and diversification of the economy between external and domestic sectors, as well as between tourism and financial services and other supporting sectors such as construction. Benefiting from no interruptions because of natural disasters during the third quarter, the tourism sector should enjoy a more than moderate increase in most indicators. Financial Services, with its linkage to Central Government fiscal performance, should provide its customary steady stream of inflows. The fiscal situation of the Central Government is expected to improve providing the necessary resources to support planned capital outlays. Additionally, national investment should receive further boosting from the continued good levels of private sector activities as domestic credit for home construction, commercial activities and personal expenditures is expanded. Of course the demand for credit will be helped by a favourable and unchanged prime interest rate. The fourth quarter will set the positive trend for the next two quarters in 1998. Tourism is expected to rebound and surpass 1995 levels of output while financial services and construction will fuel the domestic sectors.
|
|||
|
Webmaster: Jerinice Stoutt
|
The
